Vera Bradley Announces Fiscal 2014 Second Quarter Financial Results
*Net revenues increased 1.9% to $125.4 million.
*Direct net revenues increased 14.2%, including a decrease of 3.7% in
comparable-store sales; Indirect net revenues decreased 12.2%.
*Diluted EPS were $0.37 compared to $0.33 in the second quarter of fiscal
FORT WAYNE, Ind., Sept. 11, 2013 (GLOBE NEWSWIRE) -- Vera Bradley, Inc.
(Nasdaq:VRA) today announced its financial results for the fiscal 2014 second
quarter ended August 3, 2013. The Company reported net revenues of $125.4
million for the second quarter, compared to $123.0 million in the second
quarter of fiscal 2013, an increase of $2.3 million, or 1.9%. Diluted earnings
per share for the quarter were $0.37, an increase of 11.6% over earnings per
share in the second quarter of fiscal 2013.
"We managed through considerable headwinds in the second quarter, yet
delivered results in line with our expectations," said Michael C. Ray, Vera
Bradley's Chief Executive Officer. "Nonetheless, our product offering
underperformed in the midst of an uncertain consumer environment, which
affected traffic in our retail stores. While we are encouraged by our
strategic progress and remain optimistic about our long-term prospects, we
continue to have a cautious outlook for the remainder of the year."
In the Direct segment, revenues increased 14.2% to $75.0 million, as a result
of growth across all channels. In stores, net revenues grew 23.7% during the
quarter, primarily a result of opening 20 full-price and four outlet stores
since the second quarter of fiscal 2013. Comparable store sales decreased 3.7%
during the quarter due to underperformance of the product offering and reduced
traffic. E-commerce revenue grew 1.4% due to continued growth in website
traffic, offset by reduced conversion. Indirect revenues decreased 12.2% to
$50.4 million, primarily due to cautious ordering from specialty retailers.
Gross profit for the second quarter increased 4.6% to $71.8 million, resulting
in a gross margin of 57.2%, compared to 55.8% for the same period in the prior
year. The second quarter increase in gross margin was due primarily to fewer
incentives offered to specialty retailers compared to the prior year.
Total SG&A expense was $48.3 million for the second quarter, compared to $47.8
million in the prior year. SG&A as a percentage of net revenues was favorable
by 30 basis points compared to the same period in prior year, due primarily to
cost management efforts, as well as reductions in variable compensation
expense associated with company performance. This benefit was partially offset
by the deleveraging of store operating expenses.
Operating income increased 10.4% to $24.1 million, or 19.2% of net revenues,
in the second quarter compared to operating income of $21.8 million, or 17.7%
of net revenues, in the second quarter of fiscal 2013.
Net income for the quarter increased $1.6 million to $15.0 million, or $0.37
per diluted share, compared to $13.4 million, or $0.33 per diluted share, in
the second quarter of fiscal 2013.
For the twenty-six weeks ended August 3, 2013, net revenues increased 3.4% to
$248.4 million, from $240.2 million in the same period in the prior year. By
segment, Direct revenues increased 19.0% to $148.7 million, with a
comparable-store sales decline of 1.8%. Indirect revenues decreased 13.5% to
Operating income decreased 7.9% to $39.3 million, or 15.8% of net revenues,
for the twenty-six weeks compared to operating income of $42.6 million, or
17.7% of net revenues, in the prior year.
Net income for the twenty-six weeks decreased 7.2% to $24.1 million, or $0.59
per diluted share, compared to $26.0 million, or $0.64 per diluted share, a
Cash flow from operations for the twenty-six weeks ended August 3, 2013
totaled $27.0 million compared to $25.5 million for the same period in the
For the third quarter of fiscal 2014, the Company expects net revenues to be
in a range of $128 million to $130 million, compared to $138 million in the
third quarter of fiscal 2013. Gross margin for the third quarter is expected
to decline over the prior year by 280 to 300 basis points primarily due to a
shift in sales mix between the full-price and discount channels and increased
Diluted earnings per share are expected to be in a range of $0.33 to $0.35.
The earnings per share estimate assumes an effective tax rate of 38% and fully
diluted weighted average shares outstanding of 40.6 million.
For fiscal 2014, the Company expects net revenues to be in a range of $535
million to $540 million. Gross margin for fiscal 2014 is expected to decline
100 to 125 basis points.
Diluted earnings per share for the full year are expected to be in a range of
$1.47 to $1.52. This guidance includes an effective tax rate of 38% and fully
diluted weighted average shares outstanding of 40.6 million.
A conference call to discuss fiscal 2014 second quarter results is scheduled
for today, September 11, 2013, at 4:30 p.m. Eastern Time. A broadcast of the
call will be available via Vera Bradley's Investor Relations section of its
website, www.verabradley.com. In addition, a replay of the call will be
available shortly after the conclusion of the call and remain available
through December 10, 2013. To access the recording, listeners should dial
(877) 870-5176, and enter the access code, 1575606.
About Vera Bradley, Inc.
Vera Bradley is a leading designer of women's handbags and accessories,
luggage and travel items, eyewear, stationery and gifts. Founded in 1982 by
friends Barbara Bradley Baekgaard and Patricia R. Miller, the brand's iconic
designs and versatile styles offer women of all ages a colorful way to
accessorize every look. Vera Bradley offers a unique, multi-channel sales
model as well as a focus on service and a high level of engagement with fans.
Fiscal 2013 net revenues increased by 17% to $541 million. The company's
commitment to breast cancer research continues to increase its reach through
the Vera Bradley Foundation for Breast Cancer. For more information about Vera
Bradley (Nasdaq:VRA), visit www.verabradley.com/mediaroom.
We routinely post important information for investors on our website
www.verabradley.com in the "Investor Relations" section. We intend to use this
website as a means of disclosing material, non-public information and for
complying with our disclosure obligations under Regulation FD. Accordingly,
investors should monitor the Investor Relations section of our website, in
addition to following our press releases, SEC filings, public conference
calls, presentations and webcasts. The information contained on, or that may
be accessed through, our website is not incorporated by reference into, and is
not a part of, this document.
Vera Bradley Safe Harbor Statement
Certain statements in this release are "forward-looking statements" made
pursuant to the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements reflect the Company's
current expectations or beliefs concerning future events and are subject to
various risks and uncertainties that may cause actual results to differ
materially from those that we expected, including: possible adverse changes in
general economic conditions and their impact on consumer confidence and
spending; possible inability to predict and respond in a timely manner to
changes in consumer demand; possible loss of key management or design
associates or inability to attract and retain the talent required for our
business; possible inability to maintain and enhance our brand; possible
inability to successfully implement our growth strategies or manage our
growing business; possible inability to successfully open new stores as
planned; and possible inability to sustain levels of comparable-store sales.
For a discussion of these and other risks and uncertainties that could cause
actual results to differ materially from those contained in our
forward-looking statements, please refer to "Risk Factors" in Part I, Item 1A
of our Annual Report on Form 10-K for the fiscal year ended February 2, 2013.
We undertake no obligation to publicly update or revise any forward-looking
statement. Financial schedules are attached to this release.
Vera Bradley, Inc.
Condensed Consolidated Balance Sheets
August 3, February 2, July 28,
2013 2013 2012
Cash and cash equivalents $9,331 $9,603 $7,612
Accounts receivable, net 35,494 34,811 49,279
Inventories 142,864 131,562 117,895
Prepaid expenses and other current assets 9,706 11,016 8,177
Deferred income taxes 12,372 11,348 8,396
Total current assets 209,767 198,340 191,359
Property, plant, and equipment, net 82,346 77,211 70,220
Other assets 1,438 1,768 1,669
Total assets $293,551 $277,319 $263,248
Liabilities and Shareholders' Equity
Accounts payable $26,224 $14,853 $45,016
Accrued employment costs 8,442 14,162 11,209
Other accrued liabilities 19,967 16,532 17,693
Income taxes payable 2,026 7,094 --
Current portion of long-term debt -- 58 90
Total current liabilities 56,659 52,699 74,008
Long-term debt -- 15,037 25,301
Deferred income taxes 6,123 6,078 4,314
Other long-term liabilities 11,300 9,250 8,474
Total liabilities 74,082 83,064 112,097
Additional paid-in capital 77,029 75,675 74,752
Retained earnings 143,330 119,190 76,319
Accumulated other comprehensive income (890) (610) 80
Total shareholders' equity 219,469 194,255 151,151
Total liabilities and shareholders' equity $293,551 $277,319 $263,248
Vera Bradley, Inc.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
Thirteen Weeks Ended Twenty-Six Weeks Ended
August 3, July 28, August 3, July 28,
2013 2012 2013 2012
Net revenues $125,372 $123,037 $248,405 $240,238
Cost of sales 53,599 54,425 108,166 106,324
Gross profit 71,773 68,612 140,239 133,914
Selling, general, and 48,336 47,833 103,563 95,024
Other income 630 1,020 2,581 3,719
Operating income 24,067 21,799 39,257 42,609
Interest expense, net 82 152 223 343
Income before income taxes 23,985 21,647 39,034 42,266
Income tax expense 9,034 8,274 14,894 16,267
Net income $14,951 $13,373 $24,140 $25,999
Basic weighted-average shares 40,603 40,532 40,592 40,524
Diluted weighted-average shares 40,623 40,568 40,624 40,557
Basic earnings per share $0.37 $0.33 $0.59 $0.64
Diluted earnings per share $0.37 $0.33 $0.59 $0.64
Vera Bradley, Inc.
Consolidated Statements of Cash Flows
Twenty-Six Weeks Ended
August 3, July 28,
Cash flows from operating activities
Net income $24,140 $25,999
Adjustments to reconcile net income to net cash
(used in) operating activities:
Depreciation of property, plant, and equipment 6,796 4,759
Provision for doubtful accounts (117) 347
Loss on disposal of property, plant, and equipment 9 25
Stock-based compensation 1,820 1,431
Deferred income taxes (1,039) (277)
Changes in assets and liabilities:
Accounts receivable (566) (11,529)
Inventories (11,507) (10,928)
Prepaid expenses and other assets 1,640 (641)
Accounts payable 11,371 17,740
Income taxes payable (5,068) (1,705)
Accrued and other liabilities (475) 240
Net cash provided by operating activities 27,004 25,461
Cash flows from investing activities
Purchases of property, plant, and equipment (11,976) (22,704)
Net cash used in investing activities (11,976) (22,704)
Cash flows from financing activities
Payments on financial-institution debt (45,000) (62,750)
Borrowings on financial-institution debt 30,000 63,000
Tax withholdings for equity compensation 145 (269)
Other financing activities, net (406) (43)
Net cash used in financing activities (15,261) (62)
Effect of exchange rate changes on cash and cash (39) (5)
Net increase (decrease) in cash and cash equivalents (272) 2,690
Cash and cash equivalents, beginning of period 9,603 4,922
Cash and cash equivalents, end of period $9,331 $7,612
Paul G. Blair
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